CHARITIES AND TRUSTS FOR CHARITABLE USES- WHAT CONSTITUTE CHARITIES HOSPITAL FOR EMPLOYEES MAINTAINED BY RAILROAD. — A monthly fee was deducted by the defendant company from the wages of its employees for the purpose of maintaining a hospital and providing medical services for sick and injured employees. The company derived no profit from this. An injured employee was treated by the company's surgeon and died because of the surgeon's negligence. Held, that the company is not liable, provided it used reasonable care in the selection of surgeons. Arkansas Midland R. Co. v. Pearson, 135 S. W. 917 (Ark.).

A charitable hospital is not liable for the negligent acts of its physicians and surgeons unless it has been guilty of negligence in selecting them. McDonald v. Massachusetts General Hospital, 120 Mass. 432. Contra, Glavin v. Rhode Island Hospital, 12 R. I. 411. This principle has been extended to hospitals run by railroads for the treatment of their sick and injured employees. Eighmy v. Union Pacific Ry. Co., 93 Ia. 538. It has been held further, in accord with the principal case, that such a hospital run from funds deducted from the wages of employees, but without direct profit to the company, is, from the standpoint of the employees, a charity. Texas Central R. Co. v. Zumwalt, 132 S. W. 113 (Tex.); Wells v. Ferry-Baker Lumber Co., 57 Wash. 658. If profit is derived from such a hospital, it is no charity, and the company is liable for the negligence of its physicians and surgeons. Texas & Pacific Coal Co. v. Connaughten, 20 Tex. Civ. App. 642; Sawdey v. Spokane Falls & Northern Ry. Co., 30 Wash. 349. But, it is submitted, the mere lack of intention to make direct profit should not be the sole determining feature of a charity. Donnelly v. Boston Catholic Cemetery Association, 146 Mass. 163; Newcomb v. Boston Protective Department, 151 Mass. 215. And as in the principal case there seem to be great indirect benefit to the company and a business contractual duty to provide medical attention for good consideration, the company should be held liable. Phillips v. St. Louis & San Francisco R. Co., 211 Mo. 419; Texas & Pacific Coal Co. v. McWain, 124 S. W. 202 (Tex.).

CHATTEL MORTGAGES RECORDING AND REGISTRY REMOVAL TO ANOTHER STATE. A trust deed conveying two mules as security for a debt and providing that the mortgagor should retain possession until default, was executed and recorded in Mississippi, where the property then was, according to the laws of that state. After default in payment, the mortgagor, without the knowledge or consent of the mortgagee, removed the property to Tennessee and sold it to the defendants, bona fide purchasers without notice. Held, that the mortgagee has a superior title. Newsum v. Hoffman, 137 S. W. 490 (Tenn.).

The overwhelming weight of authority supports the rule that the interest of a mortgagee, once vested by the recording acts of one state, will be respected wherever the property goes. Langworthy v. Little, 12 Cush. (Mass.) 109; Greenville Nat. Bank v. Evans-Snyder-Buel Co., 9 Okl. 353. As in other cases, where such recording fails as a real protection to purchasers, the rule is caveat emptor. Handley v. Harris, 48 Kan. 606. See 19 HARV. L. REV. 568. The question usually resolves into one of policy. Some courts have held that, as part of a general policy against transfers without change of possession, the rights of bonâ fide purchasers as against such foreign mortgages, being unprotected by their own recording system, cannot be affected by records existing in another state. This seems to be law in only three jurisdictions at most. Corbett v. Littlefield, 84 Mich. 30; Miles v. Oden, 8 Mart. N. s. (La.) 214; Bank v. Carr, 15 Pa. Super. Ct. 346. On the other hand, the general prevalence of recording acts justifies the policy, commonly styled comity, of recognizing and preferring the interest acquired under such a statute in another state. Parr v. Brady, 37 N. J. L. 201. Some authority supports the principal case in the

qualification that the removal must be without the mortgagee's consent. Jones v. North Pacific Fish & Oil Co., 42 Wash. 332; Blythe v. Crump, 28 Tex. Civ. App. 327. But the weight of authority holds consent to be immaterial. Shapard v. Hynes, 104 Fed. 449; Cobb v. Buswell, 37 Vt. 337.

CONSTITUTIONAL LAW-DUE PROCESS OF Law · COMPELLING RAILROAD TO PAY FOR SIDE TRACKS. - A state railroad commission directed the defendant to construct a side track from its main line, across a public highway, to an adjoining stone quarry, on condition that the owner of the latter should do all the necessary grading on his land. Held, that the order of the commission should be affirmed. State v. Chicago, M. & St. P. Ry. Co., 131 N. W. 859 (Minn.).

The common law recognizes that adequate shipping facilities in exceptional industries requiring bulk shipments necessitate private switches. Olanta Coal Mining Co. v. Beech Creek R. Co., 144 Fed. 150. Statutes perhaps require railroads to permit connection to be made with other adjacent factories. WIS. STATS., 1898, § 1802. But statutes placing the entire cost of the siding on the railroad are unconstitutional, as taking private property without due process of law and without compensation. Mays v. Seaboard Air Line Ry., 75 S. C. 455. See 20 HARV. L. REV. 494. If the entire expense cannot be placed on the railroad, it would seem that to apportion the cost would be equally objectionable. Northern Pacific Ry. Co. v. Railroad Commission, 57 Wash. 134. In the principal case, the court argues that freight receipts will give sufficient compensation. But this overlooks the fact that charges are remuneration for carrying freight, and that shippers without private sidings would have to pay the same rates. Cf. Chesapeake & Ohio Ry. Co. v. Standard Lumber Co., 174 Fed. 107, 112. The court justifies its decision also by the police power. Undoubtedly, by the exercise of the police power, a commission may require a railroad to provide adequate facilities. But the decision seems to go beyond such regulation in requiring the railroad to assume an obligation to receive goods beyond its established route.

CONSTITUTIONAL LAW - DUE PROCESS OF LAW-POWER TO FORBID WASTE OF UNDERGROUND WATER. -A state statute forbade landowners from drawing from artesian wells on their property unreasonable quantities of carbonated water, and from wasting the water as a means of collecting the gas contained therein for the purpose of vending it as a separate commodity. Held, that the statute does not constitute a deprivation of property without due process of law. Lindsley v. Natural Carbonic Gas Co., 220 U. S. 61. See NOTES, p. 76.

CONSTITUTIONAL LAW - DUE PROCESS OF LAW WORKMEN'S COMPENSATION ACTS. - A Washington statute provided that workmen injured in certain "extra hazardous" employments while in the course of employment, the injury not being wilful on the part of the employee, should recover a fixed compensation from an industrial insurance fund; this fund to be established by graded, yearly contributions from employees in the industries enumerated as "extra hazardous." Held, that the statute is constitutional and does not violate the "due process of law" clause in the constitution. State ex rel. Davis-Smith Co. v. Clausen, Wash., Sup. Ct., Sept. 27, 1911.

For a discussion of New York case involving similar principles, see 24 HARV. L. REV. 647. It will be noticed that the Washington act goes beyond the New York act by creating an annual indemnity fund to which employers are compelled to contribute irrespective of the fact that there may be no injuries among the workmen of a particular contributor during the period over which any contribution extends.

CONSTITUTIONAL LAW

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VESTED RIGHTS STATUTE MAKING ONE-TENTH OF INCOME OF SPENDTHRIFT TRUST LIABLE TO EXECUTION. On recovering judgment from the defendant, the plaintiff moved for special execution against ten per cent of the income of a spendthrift trust created in 1879. This was permitted under a statute passed in 1908. Held, that the statute, in operating upon existing trust funds, was not unconstitutional. Brearley School v. Ward, 201 N. Y. 358.

The New York Real Property Law provides that the surplus income of a trust fund beyond the sum necessary for the education and support of the beneficiary should be liable to the claims of creditors. CONSOL. LAWS OF N. Y., 1909, REAL PROPERTY LAW, c. 52, § 98. The statute in the principal case increases the amount of income subject to execution. CODE CIV. PROC., § 1391, as amended by c. 148, LAWS OF 1908. The question is whether the statute takes away property without due process of law, in affecting existing trust funds. That depends on the nature of the beneficiary's right to exemption from execution. At common law in New York, the whole income from trust funds was liable to the claims of creditors. Bryan v. Knickerbacker, 1 Barb. Ch. (N. Y.) 409. The right of the beneficiary to exemption seems no greater than that of debtors under other exemption laws. Legislation decreasing the amount of exemption allowed to debtors is clearly valid. Leak v. Gay, 107 N. C. 468. The privilege of exemption declared by statute creates no vested right in the debtor and may be taken away by change of statute. Bull v. Conroe, 13 Wis. 233. See COOLEY, PRINCIPLES OF CONSTITUTIONAL LAW, 3 ed., 332. The effect of the decision in the principal case, moreover, is salutary in lessening the evils of spendthrift trusts. See GRAY, RESTRAINTS ON ALIENATION, 2 ed., xi. That the statute does not impair the obligation of a contract seems clear, for even if there be any contract its obligation is not impaired. Cf. Holland v. Dickerson, 41 Ia. 367.

CORPORATIONS CAPITAL, STOCK, AND DIVIDENDS - STOCK CERTIFICATES NOT SUBJECT TO ATTACHMENT. The plaintiff sought to obtain jurisdiction over a non-resident defendant by publication of service, and attachment of the certificates of stock of a foreign corporation, which were owned by the defendant, but bailed to a third party within the state. Held, that jurisdiction over the defendant has not been acquired. Maertens v. Scott, 80 Atl. 369 (R. I.). See NOTES, p. 74.

CORPORATIONS DIRECTORS ELIGIBILITY OF DUMMY DIRECTOR. Five shares of stock were transferred to A. without consideration, and the transfer recorded. A. immediately indorsed the certificate to his grantor, but his name remained as a stockholder on the company's transfer book. Held, that A. was eligible to be a director under a statute requiring directors to be stockholders. In re Ringler & Co., 130 N. Y. Supp. 62 (App. Div.).

Where the beneficial ownership of stock and the record title to it are in different persons, the record owner has the right to vote it, as far as the corporation is concerned. In re Argus Printing Co., 1 N. D. 434. An exception is made where the record owner is a trustee of stock owned by the corporation, as such stock has no vote. American Railway-Frog Co. v. Haven, 101 Mass. 398. Also, where actual fraud is shown to be contemplated, the record holder may not vote. Smith v. San Francisco & North Pacific R. Co., 115 Cal. 584. It seems settled that the record owner, and not the beneficial owner, is eligible to be a director under a statute requiring a director to be a stockholder. State ex rel. White v. Ferris, 42 Conn. 560. Contra, State ex rel. Reed v. Smith, 15 Or. 98. This rule is probably correct as a strict construction of the word "stockholder," in view of the rule as to voting. Yet it defeats the purpose of the statute, which obviously was to have the directors pecuniarily interested in

the success of the corporation. The case of a dummy director is within the above rule, and the principal case accords with the one decision exactly in point. State ex rel. Rankin v. Leete, 16 Nev. 242. But where the purpose of creating a dummy director is to perpetrate a fraud, his eligibility is not sustained. Bartholomew v. Bentley, 1 Oh. St. 37; Frank and Kneeland v. Lewis Foundry & Machine Co., 24 Pitts. Leg. J. (Pa.) 33.

CORPORATIONS STOCKHOLDERS: POWERS OF MAJORITY EMPLOYMENT OF ATTORNEYS TO DEFEND SUIT BROUGHT BY MINORITY TO RESTRAIN ULTRA VIRES ACTION. · The majority stockholders of a religious corporation in good faith employed the plaintiffs as counsel to defend an action brought by the minority stockholders to restrain an alleged improper use of a corporate fund. The defense of the majority was unsuccessful. The plaintiffs sought to recover of the corporation compensation for their services. Held, that the corporation is liable. Kanneberg v. Evangelical Creed Congregation, 131 N. W. 353 (Wis.).

The decision in the principal case may be supported on two grounds. Either it was within the power of the corporation acting through a majority of its stockholders to make the contract; or it was an executed ultra vires contract to which it has no defense. But the case raises the question as to the ultimate liability of the corporation for attorneys' fees in litigation between the majority and the minority stockholders. Recovery from the corporation by the minority is conditioned upon success. They are clearly entitled to reimbursement if they succeed in restoring assets to the corporation. Trustees v. Greenough, 105 U. S. 527. Generally they may recover if they preserve assets by restraining an improper use of property. Forrester & MacGinnis v. Boston, etc. Mining Co., 29 Mont. 397. Contra, Alexander v. Atlanta, etc. R. Co., 113 Ga. 193. Where the majority stockholders and not the corporation are the real party in interest, they must account for corporation funds paid to attorneys. Wickersham v. Crittenden, 106 Cal. 329. And where they have not acted in good faith, their claims against the corporation for legal expenses will not be allowed. M'Court v. Singers-Bigger, 145 Fed. 103. But for mistakes of

judgment honestly exercised, the corporation must suffer. See Ellerman v. Chicago Junction Railways, etc. Co., 49 N. J. Eq. 217, 232. This rule should apply where, as in the present case, the majority in good faith defend unsuccessfully an action brought by the minority shareholders.

CORPORATIONS STOCKHOLDERS: RIGHTS INCIDENT TO MEmbership SUIT IN BEHALF OF CORPORATION BY ONE ACQUIRING STOCK AFTER WRONG. - The plaintiff, a stockholder of a corporation, brought an action to set aside as fraudulent a transfer of the stock of the corporation. He acquired the stock after the transaction was completed. Held, that the plaintiff may maintain the action. Pollitz v. Gould, 45 N. Y. L. J. 591 (N. Y., Ct. App., April, 1911). In order to put an end to collusive transfers of stock for the purpose of getting into the federal courts, the Supreme Court has adopted a rule of procedure which requires a stockholder, who brings an action like the one in the main case, to prove that he owned stock when the alleged fraud was committed. SUP. CT. RULES OF PRACTICE, Rule 94, 104 U. S. ix. See Hawes v. Oakland, 104 U. S. 450. At least one state court has come to the same conclusion, arguing from general equitable principles. Home Fire Ins. Co. v. Barber, 67 Neb. 644. But the decision in the principal case adds to an increasing weight of authority, and is to be welcomed as supporting the better view. For a full discussion of the principles involved, see 21 HARV. L. REV. 195.

COVENANTS OF TITLE COVENANT AGAINST INCUMBRANCES

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-EASE

MENTS. - In an action for specific performance of an agreement to buy a piece of land, which the vendor had covenanted should be free from incumbrances,

it appeared that an irrigation canal ran across the land by virtue of an easement. Held, that this does not amount to an incumbrance within the meaning of the covenant. Schurger v. Moorman, 117 Pac. 122 (Idaho).

For a discussion of the principles involved, see 24 HARV. L. REV. 237.

DAMAGES - MEASURE OF DAMAGES EFFECT OF RESALE IN CASES OF DELAYED DELIVERY. The defendant contracted to deliver wood pulp to the plaintiff by the last of November, 1900, at 25s. per ton. Delivery was not made until July 1, 1901. Pulp was then worth 42s. 6d. per ton. In November, 1900, it was worth 70s. per ton. The plaintiff resold the pulp under contracts, some anterior to the contract with the defendant, and some anterior to the date of actual delivery, at 65s. per ton. He then sued for damages caused by the delay. There was no question of consequential damages. Held, that he may recover only 5s. per ton. Wertheim v. Chicoutimi Pulp Co., [1911] A. C. 301 (Privy Council).

The general intention of the law of damages is to place the plaintiff in as good a position as he would have been in if the contract had been performed, i. e. to compensate only. Hamilton v. Magill, 12 L. R. Ir. 187, 202. With this in view, a formula for compensating for late delivery in sales of personalty has been often adopted, namely, "the difference between the value of the goods at the date fixed for delivery, and their value when delivered." This rule is, speaking generally, correct. Clement & Hawkes Mfg. Co. v. Meserole, 107 Mass. 362, 364. See BENJAMIN, SALES, 5 ed., 987. The principal case, however, gives as the proper measure of damages the difference between the value when the goods should have been delivered and the value represented by the price for which they were resold. If the contracts of resale could be satisfied by delivering this specific pulp only, then the rule of the principal case is probably correct. But, if any pulp of that certain grade would have answered the purposes of the sub-sale, it seems that the defendant should not take advantage of the plaintiff's good bargain in reselling. Cf. Floyd v. Mann, 146 Mich. 356, 369; Rodocanachi, Sons & Co. v. Milburn Bros., 18 Q. B. D. 67, 77. But cf. Foss v. Heineman, 128 N. W. 881 (Wis.). The facts are not clear as to this. The case, however, is novel and there is a dearth of authority directly on the point decided.

STATUTORY LIABILITY

DEATH BY WRONGFUL ACT PENAL STATUTES. The sole beneficiary under the death statute released all claim of damages for the death. The administrator of the deceased now sues under the statute. Held, that the release operates as a bar. Kennedy v. Davis, 55 So. 104 (Ala.). In an action for death by wrongful act, under the Missouri death statute, the plaintiff, the widow of the deceased, offered evidence of the number and ages of her minor children as evidence of loss of support. Held, that the evidence is admissible, as the statute is "remedio-penal." Boyd v. Missouri Pacific Ry. Co., 139 S. W. 561 (Mo., Supr. Ct.).

The death statutes of most of the states are copied from Lord Campbell's Act, 9 & 10 VICT. c. 93, §§ 1, 2. Three states, however, have death statutes which do not, like that act, provide for damages based on the injury caused by the homicide. The Massachusetts statute provides for damages proportioned to the degree of culpability. MASS. R. L., c. 171, § 2. The Massachusetts decisions hold this statute penal. Hudson v. Lynn & Boston R. Co., 185 Mass. 510. Yet a recent Massachusetts case intimates that there can be but one recovery against joint offenders. See D'Almeida v. Boston & Maine R. Co., 95 N. E. 398, 399 (Mass.). The Alabama statute provides for damages "such as the jury may assess.' ALA. CODE, § 2486. The Alabama court has many times held this statute penal, and excluded evidence of pecuniary loss. Louisville & Nashville R. Co. v. Tegner, 125 Ala. 593. Yet the same court has held that the defendant may be forced to give evidence against himself, as the